Sick of Debt
DEBT…it is similar to a persistent cancer that jumps out of nowhere and you feel like you’re infected for life. How it got there is a topic for another discussion. For now, you’re infected…now what? I’ve outlined, in order of effectiveness, a “treatment” that worked for me.
Summarize all debt. Both the big and small. You cannot see the entire picture without a complete list in front of you. Don’t simply list the large items (i.e. mortgage, car payment, student loan, etc.) Include all debts, even those that you might consider “small” (i.e. credit cards for $300, etc.)
Visualize your debt. Make a graph of where you are now. Include each debt type and current corresponding amounts. Update your graph EVERY time a payment is made. It’s just like running a marathon. If you had no idea how far your marathon was, you’d probably get discouraged and start to slow down. Track your progress. Be creative and make it fun!
What gets the first shot of “medicine?” What worked for me is attacking the smallest debt first. Don’t pay attention to interest rates, fees, or the payoff date. Focus on one at a time. For example, if your credit card is $600 and you have a medical bill that is $3,000, then pay off the credit card balance first. The reason for this is to enjoy quick wins. Throw a celebration after each incremental payoff. Celebrate with your friends—don’t hide your accomplishments.
Constant increments…and I mean CONSTANT. Do not rely on just a monthly payment, nor simply increase your monthly payment (that’s still too passive). Be active – send unscheduled payments in addition to your monthly payments. Keep the normal monthly payment the same, so that in case other life events happen, you can stay in budget. In summary, every time you have extra cash or income, make an online payment, even if a payment is already scheduled.
What about savings and my 401k? Do not withdraw from or stop contributing to your savings or your 401k! In fact, keep putting the same amount toward your savings and your 401k. You are creating a lifestyle through consistent investing. Debt is just a temporary focus.
I’m literally broke! If you have absolutely zero money left over at the end of the month, reduce the amount going into your 401k, but only down to the company match, never less. Your employer’s match is free money! Additionally, look for ways to cut your budget and/or increase your income with a side gig.
Be verbal! Don’t go through this without making some noise. You can’t fight cancer by hiding it. I’m not talking about accountability (although that’s not a bad idea either), instead, just simply talk about it…to your spouse, co-worker, or friend. Get the topic outside of the black box. Talk about the elephant in the room, tell people that you’re in a battle. Be verbally passionate about the annihilation.
Final thought, the freedom from defeating debt is very much as exhilarating as defeating cancer. I should know, I’ve defeated both. The weight is lifted off your shoulders and there is an immense sense of joy knowing you are free from the ball and chain. Word of caution, there is ongoing discipline that is needed to maintain this level of freedom. Continue with the same level of persistence in “constant increments” to your savings and your 401k and you will enjoy doing and having more of the things you love.
Announcement: As of 07/15/2020 my wife and I paid off a huge full-house and kitchen remodel! It’s been my goal for a year and a half. My boss challenged me…and so I made it happen. I had to announce it because that’s the last part of my list above – be verbal.